TaxTMI 
TaxTMI 
2025 (6) TMI 2121
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....ircumstances of the case and in law and without prejudice to other grounds, Ld. CIT-Appeals has erred in upholding the invalid assessment order passed u/s 144 since Ld. AO did not issue the mandatory Show Cause Notice ('SCN') required u/s 144 before framing best judgement assessment order and thus, the impugned assessment order passed in consequent to the said SCN and additions made therein are without jurisdiction u/s 144 and hence, may please be quashed. 3. On the facts and in the circumstances of the case and in law and without prejudice to other grounds Ld. CIT-Appeals has grossly erred in not granting the opportunity of personal hearing through Video conferencing to the appellant before passing the adverse appellate order despite specifically requested by the appellant, thereby grossly violating the principles of natural justice and therefore, the appellate order u/s 250 of the Act order deserves to be quashed and set aside. 4. On the facts and in the circumstances of the case and in law, the appellate order passed under section 250 of the Act dated 24-01-2024 is cryptic, non-speaking and without considering and deciding all the grounds of appeal rais....
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....the appeal, if deemed necessary at the time of hearing of the appeal, in the interest of justice." Submission of ld.AR : 2. Ld.AR filed written submission as under : "ISSUES INVOLVED - The main issues involved in this appeal are - A. Legal validity of the assessment order-exceeding scope of limited scrutiny (Ground No. 1) B. Legal validity of the assessment order u/s 144-Not issuing mandatory SCN u/s 144 (Ground No. 2) C. Violation of principle of natural justice (Ground 3 & 4) D. Addition of Rs 20,72,641 made to the returned income (Ground No. 5 to 9) 1. Ground 1- Assessment order is bad in law-exceeding scope of limited scrutiny 1.1. The assessment was picked was for limited scrutiny for the verification of "cash deposit during the year". Refer notice u/s 143(2) (copy at Pg No. 307 to 310 of paper book) 1.2. However, while passing the assessment order, Ld. AO made addition by estimating profits at 8% on the trading turnover of the Appellant and no addition was made on the issue of cash deposit. 1.3. It is submitted that Ld. AO has travelled beyond the mandate of limited scrutiny as per....
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....page No. 6 to 9 of the paper book (para 1.3 to 1.18) & page 15 to 30 of the paper book (para 3.2 to 3.21 & para 4.2 to 4.8) which was advanced before Ld. CIT-Appeal and the same may kindly be considered while deciding this appeal." Submission of ld. DR : 2. Ld. DR for the Revenue submitted that as per Assessment Order, the Assessee's case was selected for limited scrutiny for "Large cash deposits in bank account(s) during the year and other income in Part A P&L of ITR utilized as turnover". Ld. DR submitted that accordingly, Assessing Officer has verified both these aspects and made addition. Therefore, there is no violation of CBDT Circulars. 2.1 Ld. DR submitted that Assessing Officer has analysed the turnover based on bank statements and arrived at total turnover, then, Assessing Officer has estimated income @8% of the turnover. Ld. DR requested to sustain the addition. Findings & Analysis : 3. We have heard both the parties and perused the records. In this case, Assessee had filed Return of Income electronically on 30.11.2017, declaring total income at Rs. 8,66,840/- for A.Y. 2017-18. Assessee's case was selected for scrutiny. In the assessment order, Assessing O....
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....ircumstances, we are convinced that Assessee's case was selected for limited scrutiny for examination of cash deposits during the year. However, Assessing Officer has travelled outside the scope of limited scrutiny. The Central Board of Direct Taxes had issued Instruction No.05/2016 dated 14.07.2016 regarding Scope of Limited Scrutiny. Similarly, CBDT had issued a letter dated 20.11.2018 explaining Scope of Enquiry in Limited Scrutiny. The Instructions issued by CBDT are binding on the Assessing Officer. 4. The Hon'ble Calcutta High Court in the decision of PCIT Vs. Weilburger Coatings (India) (P.) Ltd., [2023] 155 taxmann.com 580 (Calcutta) dated 11.10.2023 has held as under : "4. The revenue has raised the following substantial questions of law for consideration :- (a) Whether in the facts and circumstances of the case and in law the Learned Tribunal has committed substantial error in law in deleting the disallowance of carry forward of losses of earlier years? (b) Whether the Learned Tribunal has substantially erred in law in holding that the Assessing Officer exceeded his jurisdiction in enquiring into those issues which were beyond the scope of li....
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.... note of the CBDT Instruction No. 5 of 2016 to hold that the Assessing Officer has exceeded his jurisdiction. 8. Learned senior Counsel for the respondent/assessee has placed before us another Instruction issued by the CBDT dated 30th November, 2017, being F. No. DGIT(Vig)/HQ/SI/2017-18, wherein the CBDT has noted instances where some of the Assessing Officer were travelling beyond the issues while making assessment in limited scrutiny cases by initiating inquiries on new issue without complying with mandatory requirements of the relevant CBDT Instruction dated 26.09.2014, 29.12.2015 and 14.07.2016. It has been stated that these instances have been viewed seriously by the CBDT and in one case the Central Inspection Team of the CBDT was tasked with examination of assessment records on receipt of allegations of several irregularities and among other irregularities it was found that no reasons had been recorded for expanding the scope of limited scrutiny, no approval was taken from the PCIT for conversion of the limited scrutiny case to a complete scrutiny case and the order sheet was maintained very perfunctorily. Further, the CBDT has recorded that this gave rise to a very ....
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....e for interference of the order passed by the Tribunal. Accordingly, the appeal fails and is dismissed. The substantial questions of law are answered against the revenue. The application for stay being GA 1 of 2023 is also dismissed." In the light of the above, no grounds have been made out to interfere with the order passed by the Tribunal. 10. Accordingly, the appeal fails and is dismissed. 11. The substantial questions of law are answered against the revenue." 5. The above-mentioned decision of Hon'ble Calcutta High Court was followed by Patna Bench of ITAT in the case of Narendra Kuamr Singh Vs. ITO in ITA No.468/PAT/2024 A.Y.2017-18, dated 18.11.2024. The assessment year and facts are identical to the case of the assessee. The relevant Paragraphs 7, 8 and 9 of the order of ITAT Patna Bench are reproduced here as under : "7. After hearing the rival contentions and perusing the material available on record including the case law cited before us as well as Circular No. 3/2019 issued by the CBDT, we observe that undisputedly the case of the assessee was selected for scrutiny for examination and verification of large cash dep....
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....ated that these instances have been viewed seriously by the CBDT and in one case the Central Inspection Team of the CBDT was tasked with examination of assessment records on receipt of allegations of several irregularities and among other irregularities it was found that no reasons had been recorded for expanding the scope of limited scrutiny, no approval was taken from the Principal Commissioner for conversion of the limited scrutiny case to a complete scrutiny case and the order sheet was maintained very perfunctorily. Further, the CBDT has recorded that this gave rise to a very strong suspicion of mala fide intentions and the Officer concerned has been placed under suspension. Therefore, it was reiterated that the Assessing Officer should abide by the Instructions of CBDT while completing limited scrutiny assessment and should be scrupulous about maintenance of note sheets in assessment folders.] Thus, considering these aspects, it is viewed that the Tribunal rightly allowed the assessee's appeal on the said issue. 8. Similarly, the above issue is also covered by the decision of the Coordinate Bench in the case of Vudatha Vani Rao -vs.- Income Tax Officer [2024] 159....